International Federation of Red Cross and Red Crescent ...The General Assembly, composed of delegates from member national societies, is the supreme governing body of the IFRC. The

KPMG SA Geneva, 29 March 2010

Ref. WDL/CF

International Federation of Red Cross and Red Crescent Societies, Geneva

Independent Auditors’ Report

Financial Statements 2009

INTERNATIONAL FEDERATION OF RED CROSS AND RED CRESCENT SOCIETIES, GENEVA CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER

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2009 2008Note CHF 000s CHF 000s

ASSETS

Current AssetsCash and cash equivalents 5 249,416 265,549Financial assets at fair value through profit or loss 6 20,497 87,981Accounts receivable and prepayments, net 7 143,266 172,536Inventories, net 8 1,301 2,822Other assets 9 181 206Total Current Assets 414,661 529,094

Non-Current AssetsProperty, net 10.1 3,381 2,982Vehicles, net 10.2 14,503 15,185Other equipment 10.3 1,747 2,490Intangible assets, net 10.4 3,778 3,836Retirement benefit asset 22 4,536 7,256Total Non-Current Assets 27,945 31,749

Total ASSETS 442,606 560,843

LIABILITIES AND RESERVES

Current LiabilitiesAccounts payable 11 16,613 21,539Provisions 12 21,285 14,957Employee benefit liabilities 13 6,189 3,993Accrued expenses, deferred income and prepaid contributions 14 48,133 81,310Total Current Liabilities 92,220 121,799

Total LIABILITIES 92,220 121,799

RESTRICTED RESERVESFunds held for field operations 15 282,909 377,254Total RESTRICTED RESERVES 282,909 377,254

UNRESTRICTED RESERVESDesignated Reserves 16Operational risks 1,060 1,032Specific projects 840 1,273Actuarial valuations 4,536 7,256Total Designated Reserves 6,436 9,561

Other Unrestricted ReservesRetained surplus 61,041 52,229

Total UNRESTRICTED RESERVES 67,477 61,790

Total RESERVES 350,386 439,044

Total LIABILITIES and RESERVES 442,606 560,843

The notes on pages 5 to 30 are an integral part of these consolidated financial statements.

INTERNATIONAL FEDERATION OF RED CROSS AND RED CRESCENT SOCIETIES, GENEVA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER

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Unrestricted Restricted Total Total2009 2009 2009 2008

CONTINUING OPERATIONS Note CHF 000s CHF 000s CHF 000s CHF 000s

CONTRIBUTIONSStatutory contributions 36,015 - 36,015 35,638Voluntary contributions, net 17 4,649 282,633 287,282 459,569Total CONTRIBUTIONS 40,664 282,633 323,297 495,207

SUPPLEMENTARY SERVICES INCOME 2.14e - 33,001 33,001 51,298

Finance income 18 11,405 3,108 14,513 6,263Finance expense 18 -294 - -294 -26,171NET FINANCE INCOME/(EXPENSE) 11,111 3,108 14,219 -19,908

OTHER INCOME 19 98 17,507 17,605 13,195

Total INCOME 51,873 336,249 388,122 539,792

OPERATING EXPENDITUREEmployee benefits 21 50,491 99,711 150,202 134,451Relief supplies 153 107,537 107,690 185,118Transportation and storage 305 16,635 16,940 40,338Equipment 1,055 19,926 20,981 18,339Travel 2,860 10,126 12,986 15,286Communications 1,424 3,844 5,268 6,088Workshops & training 1,035 21,895 22,930 20,825Information 1,977 7,932 9,909 8,549Legal, professional and consultancy fees 3,042 11,118 14,160 16,564Administration, office and general 3,681 12,597 16,278 16,354Depreciation and amortisation 23 1,939 3,253 5,192 4,263Provision for outstanding pledges 133 613 746 181Provision for unpaid statutory contributions -1,341 - -1,341 -511Provisions for operations 24 - 6,027 6,027 353Contributions to national societies 24 1 83,008 83,009 22,363Contributions to other organisations 799 3,785 4,584 17,989Total OPERATING EXPENDITURE 67,554 408,007 475,561 506,550

Programme support recovery 28 -23,603 23,603 - -Project deficit provision and write off 12 2,235 -1,016 1,219 -913

Total OTHER EXPENDITURE -21,368 22,587 1,219 -913

TOTAL COMPREHENSIVE INCOMEFOR THE YEAR 5,687 -94,345 -88,658 34,155

Attributable to:Restricted reserves - -94,345 -94,345 44,019Unrestricted reserves 5,687 - 5,687 -9,864

5,687 -94,345 -88,658 34,155

There were no discontinued operations and no other comprehensive income during the year. The notes on pages 5 to 30 are an integral part of these consolidated financial statements.

INTERNATIONAL FEDERATION OF RED CROSS AND RED CRESCENT SOCIETIES, GENEVA CONSOLIDATED STATEMENT OF CHANGES IN RESERVES

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Restricted TotalFunds held for

field operations

Designated reserves Other

CHF 000s CHF 000s CHF 000s CHF 000s2009

Balance at 1 January 377,254 9,561 52,229 439,044

Transfers to/from reservesIncrease of field operations with temporary deficit financing -44 - - -44Decrease in donor-restricted contributions for specific operations -94,300 - - -94,300

Unrestricted income for the year - - 5,687 5,687

Total comprehensive income for the year -94,345 - 5,687 -88,658

Used during the year - -4,208 4,208 -Allocations during the year - 1,083 -1,083 -

Balance at 31 December 282,909 6,436 61,041 350,386

Restricted TotalFunds held for

field operations

Designated reserves Other

CHF 000s CHF 000s CHF 000s CHF 000s2008

Balance at 1 January 333,235 5,572 66,082 404,889

Transfers to/from reservesDecrease of field operations with temporary deficit financing 360 - - 360Increase in donor-restricted contributions for specific operations 43,659 - - 43,659

Unrestricted income for the year - - -9,864 -9,864

Total comprehensive income for the year 44,019 - -9,864 34,155

Used during the year - -228 228 -Allocations during the year - 4,217 -4,217 -

Balance at 31 December 377,254 9,561 52,229 439,044

Unrestricted

Unrestricted

The notes on pages 5 to 30 are an integral part of these consolidated financial statements.

INTERNATIONAL FEDERATION OF RED CROSS AND RED CRESCENT SOCIETIES, GENEVA CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER

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2009 2008CHF 000s CHF 000s

CASH FLOWS FROM OPERATING ACTIVITIES

Total comprehensive income for the year -88,658 34,155

Adjustment for:Reclassification of other income and expenditure -3,102 -9,874Depreciation and amortisation of property, plant, equipment and intangibles 5,192 4,263Gain from disposals of property, plant and equipment, net -137 -237Impairment loss in intangible assets 150 -Contributed assets -106 -Movement in non-cash pension asset 2,720 -3,217Net movement in provisions 6,328 -1,144

11,045 -10,209

Operating (deficit)/surplus before changes in working capital -77,613 23,946

Changes in working capitalDecrease in financial assets, net 67,484 10,904Decrease in accounts receivable and prepayments, net 29,270 12,270Decrease/(increase) in inventories 1,521 -1,259(Decrease) in accounts payable and accrued expenses -38,103 -41,473Increase/(decrease) in short-term employee benefit liabilities 2,197 -812Net change in working capital 62,369 -20,370

CASH FLOWS (USED IN)/GENERATED FROM OPERATING ACTIVITIES -15,244 3,576

CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIESAcquisition of property, plant, equipment and intangibles -7,044 -6,520Proceeds from disposals of property, plant and equipment 3,028 2,178Bank interest received, net 1,588 5,668NET CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES -2,428 1,326

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS -17,672 4,902

CASH & CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 265,549 256,449

Effect of exchange rate fluctuations on cash held 1,539 4,198

CASH & CASH EQUIVALENTS AT THE END OF THE YEAR 249,416 265,549 The notes on pages 5 to 30 are an integral part of these consolidated financial statements.

INTERNATIONAL FEDERATION OF RED CROSS AND RED CRESCENT SOCIETIES, GENEVA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009

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NOTE 1 - ACTIVITIES Founded in 1919, the International Federation of Red Cross and Red Crescent Societies (IFRC) is a membership organisation comprising 186 member Red Cross and Red Crescent societies governed by a Governing Board and with management support provided by a Secretariat with more than 60 delegations strategically located to support activities around the world. The Secretariat headquarters’ address is 17, Chemin des Crêts, Geneva, Switzerland. In 1996, the IFRC concluded a Status Agreement with the government of Switzerland which recognised the IFRC's international personality and reconfirmed its exemption from all Swiss taxes. The IFRC has been granted observer status at the United Nations. The IFRC’s mission is to improve the lives of vulnerable people by mobilizing the power of humanity. Its principal activities include:

• promoting individual and community humanitarian principles and values • responding to disasters by providing assistance to vulnerable people, from refugees to victims of natural

disasters • disaster preparedness activities which aim to make national societies and communities more aware of the risks

they face, how to reduce their vulnerability, and how to cope when disaster strikes • health and community care activities to enable communities to reduce their vulnerability to disease, and prepare

for and respond to public health crises • guiding and supporting the development of national societies to enable them to fulfil their responsibilities in

providing humanitarian services in their own countries. The General Assembly, composed of delegates from member national societies, is the supreme governing body of the IFRC. The Governing Board, elected by and from among the members of the General Assembly, has authority to govern the IFRC between meetings of the Assembly, including decision authority on certain financial matters. The Finance Commission, comprising nine members and a chairman elected in a personal capacity by the General Assembly, has as its key function to give its advice on all financial questions affecting the IFRC. The IFRC acts under its own constitution with all rights and obligations of a corporate body with a legal personality. The IFRC is solely responsible, to the exclusion of its member societies, for all its transactions and commitments. The International Federation of Red Cross and Red Crescent Societies (IFRC) together with National Red Cross and Red Crescent Societies and the International Committee of the Red Cross (ICRC) make up the International Red Cross and Red Crescent Movement. These financial statements of the IFRC for the year ended 31 December 2009 are consolidated to include activities of the Geneva Secretariat, all IFRC delegations, and the Foundation for the International Federation of Red Cross and Red Crescent Societies (the Foundation). The IFRC has interests in certain jointly controlled operations which are proportionately consolidated for the purposes of these financial statements (see also Note 2.3b). The consolidated financial statements presented do not include the results of the member national societies. Each of these has its own legal status separate from that of the IFRC and the IFRC exercises no control over them. The consolidated financial statements were examined and endorsed for issue on 7 April 2010 by the Finance Commission. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES 2.1 Statement of compliance The consolidated financial statements have been prepared in accordance with and comply with International Financial Reporting Standards (IFRS) as adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB and are presented in accordance with the IFRC’s Financial Regulations. Currently, IFRS do not contain specific guidance for non-profit organisations (NPO) and non-governmental organisations (NGO) concerning the accounting treatment and the presentation of financial statements. Where IFRS is silent or does not give guidance on how to treat transactions specific to the not-for-profit sector, accounting policies have been based on the general principles of IFRS, as detailed in the IASB Framework for the Preparation and Presentation of Financial Statements.


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2.2 Basis of preparation In accordance with the IFRC’s Financial Regulations adopted by the General Assembly, the consolidated financial statements are presented in Swiss Francs, rounded to the nearest thousand. The consolidated financial statements have been prepared under the historical cost convention, except certain property, plant and equipment recognised for the first time under IFRS, financial assets and the retirement benefit asset, which are stated at their fair value. Fair value is the amount for which an asset, liability or financial instrument could be exchanged between knowledgeable and willing parties in an arm’s length transaction. Preparation of the consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results may, ultimately, differ from those estimates, and the original estimates and assumptions will be modified, as appropriate, in the year in which the circumstances change. Reclassification of certain comparative figures has been made in the consolidated financial statements, in order to be consistent with the current year presentation. The following new and revised Standards and Interpretations have been issued, but are not yet effective. They have not been adopted early for the purpose of these consolidated financial statements. Their impact on the consolidated financial statements of the IFRC has not yet been systematically analysed; however, a preliminary assessment has been conducted by IFRC’s management, and the expected impact of each Standard and Interpretation is presented below. (a) Standards, amendments and Interpretations to existing standards that are not yet effective:

Standard/amendment/Interpretation Effective date

IFRC planned application

Anticipated impact

IAS 27 amended - Consolidated and Separate Financial Statements 1 July 2009 2010 No material impact

Improvements to IFRSs (April 2009) 1 July 2009 2010 No material impact IAS 24 - Related Party Disclosures (revised 2009) 1 January 2011 2011 No material impact IFRS 9 - Financial Instruments: Measurement and Classification 1 January 2013 2013 No material impact

Amendments to IFRIC 14: IAS 19 1 January 2011 2011 No material impact (b) Interpretations to existing standards that are not yet effective and are not relevant to the IFRC’s operations:

Standard/amendment/Interpretation Effective date IFRS 3 revised - Business Combinations 1 July 2009 Amendment to IAS 39 - Financial Instruments: Recognition and Measurement - Eligible Hedged Items 1 July 2009

IFRIC 17 - Distributions of Non-cash Assets to Owners 1 July 2009 Improvements to IFRSs 2008 - Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2009

IFRS 1 revised - First Time Adoption of IFRS 1 July 2009 Amendment to IFRS 1 - First-time Adoption of International Financial Reporting Standards – Additional Exemptions 1 January 2010

Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions 1 January 2010 Amendment to IAS 32 - Financial Instruments: Presentation - Classification of Rights Issues 1 February 2010 IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

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2.3 Basis of consolidation a) Controlled entity The controlled entity is the Foundation for the International Federation of Red Cross and Red Crescent Societies (the Foundation), a special Foundation over which the IFRC has the power to govern the financial and operating policies, so as to obtain benefits from its activities. The Foundation was established to support the objectives of the IFRC, by providing the necessary institutional framework for international revenue projects undertaken by, and to the benefit of, the IFRC and its member Red Cross and Red Crescent National Societies. The assessment of whether the IFRC controls the Foundation includes an examination of all facts and circumstances that affect potential voting rights, except the intention of management and the financial ability to exercise any such rights. Although the IFRC does not control directly, or indirectly, more than half of the voting power of the Foundation, it is fully consolidated into the financial statements on the grounds that the IFRC exercises control by virtue of having a 100% interest in the net assets. Inter-entity transactions and balances are eliminated. The Foundation’s accounting policies are consistent with those adopted by the IFRC. b) Joint Ventures The IFRC has interests in the following jointly controlled operations, whose activities are in accordance with the IFRC’s principal activities, as outlined above: Global Road Safety Partnership; Non-Governmental Organisations (NGOs) HIV/AIDS Code; ProVention Consortium; Sphere Programme and Steering Committee Human Response. The IFRC accounts for its interests in these operations by proportionate consolidation combining its share of each joint venture’s individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the IFRC consolidated financial statements. Joint ventures’ accounting policies are consistent with those adopted by the IFRC. 2.4 Foreign currency transactions The presentation and functional currency of the IFRC is the Swiss Franc, as statutory contributions and operating expenditures are primarily denominated in, and influenced by, the Swiss Franc. The IFRC’s operations are not concentrated in any one economic environment, but appeals are always launched in Swiss Francs, and expenditure is budgeted and managed in Swiss Francs. Monetary assets and liabilities denominated in foreign currencies are translated into Swiss Francs using the month end exchange rate. Foreign currency transactions are translated into Swiss Francs using rates which approximate the prevailing rate at the date of the transactions. Exchange gains and losses resulting from the settlement of foreign currency transactions and from translation are included under “Net finance income/(expense)”, in the Consolidated Statement of Comprehensive Income, with the exception of realised exchange gains and losses on voluntary contributions, which are included under “Voluntary contributions, net” in the Consolidated Statement of Comprehensive Income. The principal rates of exchange against the Swiss Franc are shown below:

Closing rate of exchange Average rate of exchange 2009 2008 2009 2008 USD 1.03 1.05 1.08 1.07 EUR 1.49 1.49 1.51 1.58 GBP 1.65 1.55 1.69 1.97 SEK - 100 14.39 13.59 14.25 16.37 CAD 0.99 0.87 0.96 1.01

2.5 Cash and cash equivalents The IFRC considers cash on hand, amounts due from banks and short-term deposits with banks with original maturities of three months or less, to be cash and cash equivalents. Bank borrowings, that are repayable on demand and form an integral part of the IFRC’s cash management, are included as a component of cash and cash equivalents for the purpose of the Consolidated Statement of Cash Flows.


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In certain countries, where implementing national societies operate under the legal status of the IFRC, bank accounts, in the name of the IFRC, have been opened for these national societies. These bank accounts have not been included in these consolidated financial statements as the IFRC has no control over the funds flowing in and out of these accounts, and no IFRC employees are signatories to these accounts. In addition, there are agreements in place, between the IFRC and the national societies operating such accounts, which transfer the risks and rewards of their operation to the national societies concerned. 2.6 Financial assets Financial assets comprise units held in global equity funds (2008 global bond funds and global equity funds) which are recorded as financial assets at fair value through profit and loss and classified as current assets. The fair value of the units is fully determined by reference to published price quotations in an active market. Purchases and sales of units are recognised on the trade date, which is the date that the investment managers commit to purchase or sell the asset, on behalf of the IFRC. Realised and unrealised gains and losses arising are changes in the fair value of financial assets, and are included in the Consolidated Statement of Comprehensive Income under “Net finance income/(expense)”, in the period in which they arise. 2.7 Accounts receivable Receivables comprise all statutory contributions due but not yet received, outstanding pledges (written commitments) received from donors, and amounts due, from national societies and sundry customers, for the provision of services. Receivables are stated at original pledge or invoice amount less provision made for impairment. A provision for impairment is made when there is objective evidence that the Federation will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the carrying amount and the recoverable amount. 2.8 Inventories Inventories, principally prepositioned relief items, and telecommunications and computer equipment, which have not been committed to a project, are stated at the lower of cost or net realisable value. Cost is determined using the first in, first out (FIFO) method, and comprises cost of purchase and other costs directly attributable to acquisition. Net realisable value is the estimated selling price, in an arms length transaction, less attributable selling expenses. Inventories are included in expenditure once they have been committed to a project. Relief and other items acquired for specific projects are expensed at the time of receipt, and are not included in inventories. 2.9 Property, plant and equipment Property, vehicles, and equipment are stated at historical cost less accumulated depreciation. Assets received in-kind are accounted for using the same principles as used for purchased assets, with acquisition costs being determined on the basis of donor values. Depreciation is calculated on the straight-line method to write off assets to their estimated residual values over their estimated useful lives as follows:

Property up to 50 years Light vehicles 5 years Heavy vehicles 10 years Computer equipment 3 - 4 years Other equipment 3 - 5 years

When the carrying amount of an asset is greater than its estimated recoverable amount, it is, immediately, written down to its estimated recoverable amount.


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Gains and losses, on disposals, are determined by comparing proceeds with net carrying amounts, and are recognised in the Consolidated Statement of Comprehensive Income. Repairs and maintenance costs are recognised in the Consolidated Statement of Comprehensive Income during the financial period in which they are incurred. Subsequent expenditure is capitalised only when it increases the probable future economic benefits of the asset. 2.10 Intangible assets Acquired computer software is capitalised on the basis of the costs incurred to acquire and bring the specific software to use. Amortisation is calculated on the straight-line method to write off assets to their estimated residual values over their estimated useful lives of 3 years. Costs associated with maintaining software are recognised in the Consolidated Statement of Comprehensive Income during the financial period in which they are incurred. 2.11 Impairment In order to determine whether there is any indication of impairment, the carrying amounts of the IFRC’s assets, other than financial assets (see Note 2.6) and inventories (see Note 2.8), are reviewed at each period end date, or earlier, if events, or changes in circumstances, indicate that the carrying amount may not be recoverable. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the higher of the asset’s net selling price, or its value in use. Impairment losses are recognised in the Consolidated Statement of Comprehensive Income. An impairment loss is reversed if there is an upward revision of the recoverable amount. An impairment loss is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss had been recognised. 2.12 Provisions Provisions for redundancy costs, operations, project deficits and restructuring are recognised when there is a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flow that reflects current market assessments of the time value of money, and where appropriate, the risks specific to the liability. a) Provision for redundancy costs Provision is made for the estimated cost of known redundancies, which are normally paid out within the next twelve months. A redundancy is known when the decision to make the employee redundant has been taken and communicated. b) Provision for operations The provision for operations represents the value of working advances made to national societies which the recipient national societies have not reported on by the period end date. Detailed breakdowns of the expenditure incurred by the national societies are not, therefore, known at the period end date, but are normally reported shortly thereafter. c) Provision for project deficits A provision for project deficits is maintained in respect of those projects where expenditure has exceeded income. If additional funding is not forthcoming to reverse the deficits within twelve months following the period end date, the deficits are written off. d) Provision for restructuring A provision for restructuring is made when the IFRC has a constructive obligation to restructure; that is when a detailed formal plan identifying the key elements exists, and there is an expectation that the plan will be implemented.


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2.13 Reserves Reserves are classified as either unrestricted or restricted reserves. a) Unrestricted reserves These are not subject to any legal or third party restriction and can be used as the IFRC sees fit. Unrestricted reserves may be designated by the IFRC for specific purposes, to meet future obligations or mitigate specific risks. Designated reserves include the following: Designated reserves Operational risks reserve Based on an assessment of risk exposure, this concerns the IFRC’s self-insurance reserve for vehicle damage. Specific projects reserve Allocations for specific projects to be undertaken are made in anticipation of events taking place, such as statutory meetings and Governing Board initiatives. Actuarial valuations The actuarial valuation of the IFRC’s pension funds results in actuarial gains and losses and their subsequent amortisation. Movements on these valuations are based on factors outside the IFRC’s control, e.g. changes in actuarial assumptions, changes in pension fund profile, etc., and are, therefore, allocated to a reserve designated to record such movements. b) Restricted reserves These represent the cumulative excess of income, from earmarked voluntary contributions, over expenditures on stipulated field operations. Restricted reserves include the following: Funds held for field operations Donor-restricted contributions Some contributions pledged to, or received by the IFRC, have been earmarked to the extent that donors stipulate that the funds are to be used on IFRC operations at appeal, programme, project or sub-project level. The cumulative excess, of earmarked voluntary contributions over stipulated field operation expenditure, is recorded as funds held for field operations within restricted reserves. In the event that the funds cannot be spent, the IFRC obtains agreement from the donor for a reallocation of those funds for a different use, or reimburses them to the donor, in which case they are recognised as a liability until the effective repayment takes place. Field operations with temporary deficit financing Expenditures on individual field projects may exceed the amount of income from voluntary contributions that have been allocated to projects at reporting dates. The excess of expenditure over income, on individual projects, is separately reflected within funds held for field operations as “Field operations with temporary deficit financing”, so long as management considers that future funding will be forthcoming. When management considers that future funding is unlikely to be forthcoming, the deficit is reclassified as unrestricted expenditure, and reflected as a reduction in unrestricted reserves, via the provision for project deficits. 2.14 Income Income comprises statutory contributions from members, contributions in cash or in-kind from donors, investment income, sundry income from the sale of goods and income from services. a) Statutory contributions Statutory contributions are fixed by the General Assembly, the supreme governing body of the IFRC, and are recognised in the year they fall due, unless there is significant uncertainty over the collection of the amounts, or they are subject to extended payment terms, in which case the income is not recognised until payment is received. Full provision is made for any statutory contributions recognised that have not been paid by the year end. This does not invalidate the obligation of member societies to pay the amounts due. Statutory contributions receivable may be subject to appeal and subsequent adjustments.


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b) Voluntary contributions Cash contributions are recognised when a confirmed written pledge has been received from the donor. Contributions that are based on contracts for specific projects, akin to government grants, are recognised as expenditure is incurred and contractual obligations are fulfilled. Contributions received, but not yet recognised, are included in deferred income. The IFRC typically receives such contributions from UN agencies, ECHO and other government agencies such as USAID. Legacies and bequests in cash are recorded at the earlier of receipt, or where the amount to be received is known, at the date legal title has passed. In-kind contributions of goods (comprising relief supplies) and services (in the form of staff or transport) are recognised on the date of receipt of the goods or services, and are reported as equal contributions and expenses in the Consolidated Statement of Comprehensive Income. In-kind goods and services received in response to appeals are measured at fair value. The fair value of in-kind goods is taken as the donor indication of the value. This value is tested for reasonableness and adjusted accordingly, by comparing it to the cost that would be incurred by the IFRC, if it were to buy similar goods, in the open market, for the same intended use. The fair value of in-kind staff is taken as the average cost that would be incurred by the IFRC, if it were to directly employ a person in a similar position.

In-kind contributions of fixed assets are recognised at fair value, and recorded under voluntary contributions. Depreciation and, if applicable, impairment adjustments, of such assets, are included in operational expenditure in the same manner as for purchased fixed assets.

c) Earmarking Voluntary contributions are identified according to the level of earmarking (see 2.13 Donor-restricted contributions). Unearmarked contributions Unearmarked contributions can be used for any purpose to further the objectives of the organisation, and are recognised in the Consolidated Statement of Comprehensive Income as unrestricted income, when pledged. At the end of the accounting period, unspent, unearmarked contributions are included in unrestricted reserves. Earmarked contributions Earmarked contributions can be stipulated by donors for use on field operations at the appeal, programme, project or sub-project level. Such earmarked contributions are fully under the control of the IFRC, and are recognised in the Consolidated Statement of Comprehensive Income as restricted income, when pledged. At the end of the accounting period, unspent earmarked contributions are included in restricted reserves. Contributions, which are earmarked for use in a future period, and are, therefore, not fully under the control of the IFRC until that period, are recognised as deferred income in the curent period, and, subsequently, recognised in the Consolidated Statement of Comprehensive Income, in the future period for which they were earmarked. Contractually earmarked contributions Where earmarked contributions are made subject to a specific service contract with the donor, income is recognised as expenditure is incurred and contractual obligations are fulfilled. d) Income from the sale of goods Income from the sale of goods, principally from publications and promotional goods, is recognised when the risks and rewards of ownership are passed to the buyer. e) Income from the provision of services Income from services is recognised in the period in which the service is rendered. For the provision of services across accounting periods, income is recognised according to the stage of completion of the service, by reference to services performed to date as a percentage of total services to be performed.


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The majority of income from the provision of services is derived from services provided to implementing national societies in countries where these national societies are working bi-laterally with the local national society, rather than multi-laterally with the IFRC and the local national society. Income from these types of services is included under “Supplementary services income” in the Consolidated Statement of Comprehensive Income. 2.15 Finance income and expense The net finance result is comprised of interest and dividends received on funds invested, realised and unrealised foreign exchange gains and losses, and unrealised gains and losses on units held in global equity and bond funds. Interest income is recognised, in the Consolidated Statement of Comprehensive Income, as it accrues, taking into account the effective yield on the asset. 2.16 Employee benefit costs a) Retirement benefit obligations The IFRC operates two pension funds for expatriate field staff and all headquarters staff. Pension obligations are covered by independent funds which are held in a single, separate legal entity that is governed by Swiss law. These independent funds are fully funded through payments, as determined by periodic actuarial calculations, in accordance with Swiss law. The assets of the funds are managed as one within the separate legal entity. For the purposes of these consolidated financial statements both funds are considered and accounted for as a single defined benefit plan in accordance with the requirements of IFRS. A defined benefit plan is a pension plan that defines an amount of pension fund benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. The amount recognised in the Consolidated Statement of Financial Position in respect of the defined benefit plans is the present value of the defined benefit obligations at the period end date less the fair value of the plan assets, together with adjustments for unrecognised actuarial gains and losses and past service costs. The defined benefit obligation is calculated by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates, on high quality corporate bonds, that are denominated in Swiss Francs, the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Where the amount determined in accordance with the above is an asset, it is recognised at the lower of the amount so determined and; the total of any cumulative unrecognised net actuarial losses and past service cost and the present value (using the same discount rate as above) of likely reductions in future contributions to, or refunds from the scheme. Cumulative actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions in excess of the greater of 10% of the value of plan assets or 10% of the defined benefit obligation, are spread to income over the employees’ expected average remaining working lives. Staff employed locally by the delegations receive social benefits in accordance with the legislation of the countries concerned and the local collective staff agreements. The cost of such benefits is recognised on an accruals basis in these consolidated financial statements. b) Termination benefits Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date, contract completion date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. Termination benefits are recognised on the basis of a formal committed plan to terminate the employment of current employees, or are provided as a result of an offer made to encourage voluntary redundancy. 2.17 Leases A lease is an agreement whereby the lessor conveys to the lessee, in return for a payment or series of payments, the right to use an asset for an agreed period of time. A finance lease is a lease that transfers, substantially, all the risks and rewards incidental to ownership of an asset. An operating lease is a lease other than a finance lease.


Page 13

a) Finance leases The IFRC has no interest in finance leases, as either lessor or lessee. b) Operating leases as lessee Payments made under operating leases are recognised in the Consolidated Statement of Comprehensive Income on a straight-line basis over the period of the lease. c) Operating leases as lessor Lease income from operating leases is recognised in the Consolidated Statement of Comprehensive Income on a straight line basis over the lease term. 3 Financial risk management 3.1 Financial risk factors The IFRC is exposed to a variety of financial risks namely: market risk (including foreign currency risk and pricing risk); credit risk; liquidity risk; and interest rate risk. The IFRC seeks to actively minimise potential adverse effects arising from these exposures as detailed below. The Secretary General has overall responsibility for the establishment of the IFRC’s risk management framework, and in this regard, has established, in consultation with the Finance Commission, the IFRC’s Investment Guidelines, which set out the overall principles and policies for the management of the IFRC’s use of financial instruments. The Finance Commission has the oversight responsibility for ensuring management in accordance with the Investment Guidelines, and reports thereon to the Governing Board and the General Assembly. In addition, in 2007 the Governing Board established an Audit and Risk Committee to provide advice on all risk matters affecting the IFRC, and in particular, advice on risk identification, evaluation, measurement, monitoring and the overall risk management processes of the IFRC. a) Market risk Foreign currency risk Foreign currency risk arises primarily from voluntary contributions that are denominated in a currency other than Swiss Francs, for the period between pledge date and receipt date. The main currencies giving rise to this risk are the US Dollar, Euro, Pound Sterling, Canadian Dollar and Swedish Kroner. The IFRC ensures that net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates, where necessary to address short-term needs. At 31 December 2009, if the Swiss Franc had weakened by 5% against the aforementioned currencies, with all other variables held constant, the net result for the year would have been CHF 5,575k higher (2008: CHF 6,063k higher), as a result primarily of foreign exchange gains on translation of pledges receivable balances and bank balances held mostly in US Dollars and Euro. Price risk The IFRC is exposed to equity price risk because of investments measured at fair value through profit or loss. In order to manage its price risk arising from investments in equities, the IFRC diversifies its investment portfolio, which is managed by external investment managers, in accordance with the limits set out in the IFRC’s Investment Guidelines. At 31 December 2009, if the price of IFRC equity investments had fallen by 5%, with all other variables held constant, the net result for the year would have decreased by CHF 1,025k (2008: CHF 810k). At 31 December 2009, there is no exposure to commodity or securities price risks. b) Credit risk The IFRC’s principal receivables are with its member national societies, donor governments and other international orgainsations, where credit risk is considered to be low. Full provision is made for all unpaid statutory contributions at each period end date. IFRC’s Investment Guidelines only allow investment in liquid securities and deposits, and only with counterparties that have a good credit rating. Following the deterioration in the economic climate, the number of counterparties, with whom funds are deposited, has been increased in 2009, in order to achieve better diversification, and thus minimise counterparty risk. The credit rating of all counterparties is reviewed on a regular basis.


Page 14

The IFRC maintain banking relations with certain unrated financial institutions in countries, primarily in Africa, where rated financial institutions are not operational. The value of assets held with such institutions at 31 December 2009 was CHF 1,600k (2008: CHF 1,900k) – see also note 26b. Other positions are not material, or are covered by provisions. c) Liquidity risk Liquidity risk is minimised by maintaining sufficient funds as cash in hand, on-demand deposits or short-term deposits with maturities of three months or less, to meet short-term liabilities. In addition, investments are all in liquid securities which can easily be sold to meet longer term cash flow needs. d) Interest rate risk There is no significant short-term exposure to changes in interest rates, as cash and cash equivalents are held as cash in hand, on-demand deposits, or in short-term deposits with maturities of three months or less, and there are no interest-bearing liabilities. 3.2 Capital risk management By its very nature, the IFRC does not have capital as defined by IFRS. Unrestricted reserves may be considered to have similar characteristics to those of capital, the intention of which is to maintain a sound financial position to ensure that the organisation is able to continue its operations and thereby fulfill its mission. Following an analysis of the financial risks to which the IFRC is exposed, the Secretary General has set an unrestricted reserves target of CHF 45,000k to CHF 55,000k. This target has been agreed by the Finance Commission. The IFRC is not subject to any externally imposed capital or reserves requirements. 3.3 Fair value estimation The fair value of financial assets is reported in note 6 to the consolidated financial statements. The fair value of cash and cash equivalents, other financial assets and accounts payable are not materially different from their carrying amounts less impairment provisions. 4 Critical accounting estimates and judgements Accounting estimates and judgements are continually evaluated, and are based on historical experience and other factors, including reasonable expectations of future events according to relevant circumstances. 4.1 Critical accounting estimates and assumptions The IFRC makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities, within the next financial year, are outlined below. Long term expenditure commitments The IFRC enters into certain long term expenditure commitments, which may not be fully funded by contributions pledged, or received at the time the commitments are entered into. At each period end, the IFRC estimates expected future funding to cover future expenditure commitments. Changes in estimates could result in the need to establish a provision in accordance with the policy in note 2.12 (c) above. 5 Cash and cash equivalents

2009 2008CHF 000s CHF 000s

Cash and bank accounts 26,247 25,077Time deposits 223,169 240,472

249,416 265,549 Cash and bank accounts include CHF 34k (2008: CHF 375k) held on behalf of the Masambo Fund (see note 29a).


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6 Financial assets at fair value through profit or loss

2009 2008

CHF 000s CHF 000s

Global bond funds -

71,789 Global equity funds 20,497 16,192 20,497 87,981

The global equity funds, accounted for at fair value, were acquired in August 2007 at an original cost of CHF 30,000k. An additional CHF 1,337k, representing dividend income received since inception, has been reinvested in the equity funds. 7 Accounts receivable and prepayments

2009 2008CHF 000s CHF 000s

Current accounts receivable and prepaymentsPledges 101,478 143,005Provision for doubtful pledges receivable -1,024 -489

100,454 142,516

National societies 33,649 21,992Provision for doubtful national societies accounts receivable -762 -683

32,887 21,309

Statutory contributions 26,426 27,572Provision for unpaid statutory contributions -26,426 -27,572

- -

Advances to employees 1,146 840Taxes refundable 556 1,444Prepayments 1,948 356Advance payments to contractors 1,328 2,089Sundry receivables 4,947 3,982

9,925 8,711

Total current accounts receivable and prepayments, net 143,266 172,536 Full provision is made for all statutory contributions outstanding at the year end. This does not invalidate the obligation of member national societies to pay amounts due. In 2009, CHF 1,175k of arrears of statutory contributions due from national societies in default (2008: CHF 1,544k), which had not been previously recognised in the Consolidated Statement of Comprehensive Income, were received, and have, therefore, been recognised in the 2009 Consolidated Statement of Comprehensive Income. CHF 23,863k (2008: CHF 24,329k) of the CHF 26,426k (2008: CHF 27,572k) statutory contributions which are entirely provided for, have not yet been recognised in the Consolidated Statement of Comprehensive Income (see Note 2.14a).


Page 16

The ageing of accounts receivable in respect of pledges, national societies and statutory contributions, before provisions and excluding other receivables totalling CHF 161,553k (2008: CHF 192,569k), is as follows:

2009 2008CHF 000s CHF 000s

Ageing of accounts receivable in respect of pledges, national societies& statutory contributionsNot past due 85,323 113,178 Past due 1-60 days 14,819 4,292 Past due 61-90 days 10,558 1,500 Past due 91-180 days 5,498 17,679 Past due more than 180 days 45,355 55,920

161,553 192,569 Movements of the provisions for impaired receivables are as follows:

Provision for pledges

receivable

Provision for national societies accounts

receivable

Provision for unpaid

statutory contributions TOTAL

CHF 000s CHF 000s CHF 000s CHF 000sMovements on the provisions for impairment of accounts receivable:

2009Balance at 1 January 489 683 27,572 28,744Receivables written off during the year - - - -Unused amounts reversed -503 -232 -2,912 -3,647Additional provisions 1,038 311 1,766 3,115Balance at 31 December 1,024 762 26,426 28,212

2008Balance at 1 January 308 659 28,036 29,003Receivables written off during the year -122 - - -122Unused amounts reversed -186 -68 -2,298 -2,552Additional provisions 489 92 1,834 2,415Balance at 31 December 489 683 27,572 28,744 Accounts receivable in respect of pledges and national societies and statutory contributions are denominated in the following currencies:

2009 2008CHF 000s CHF 000s

CurrencyUS dollar 59,244 66,511Euro 27,653 26,886Pound Sterling 3,879 1,164Swedish Kroner 2,095 4,665Canadian dollar 8,373 2,092Swiss Francs 43,562 80,124Other currencies 16,747 11,127

161,553 192,569


Page 17

8 Inventories

2009 2008CHF 000s CHF 000s

Prepositioned relief items 1,033 2,313Telecommunications equipment 172 361Other equipment 96 148

1,301 2,822 The cost of inventories recognised as expense and included in operating expenditure comprises:

2009 2008CHF 000s CHF 000s

Telecommunications equipment 13 542Other equipment 197 808Prepositioned stock 1,279 2,075

1,489 3,425 9 Other assets

2009 2008CHF 000s CHF 000s

Accrued interest income 173 198Other assets 8 8

181 206 10 Property, vehicles, other equipment and intangible assets

10.1 Property

2009 2008Buildings BuildingsCHF 000s CHF 000s

Cost or valuationBalance at 1 January 4,046 4,046 Additions 465 - Balance at 31 December 4,511 4,046

Accumulated depreciation and value adjustmentsBalance at 1 January -1,064 -1,000Depreciation charge for the year -66 -64Balance at 31 December -1,130 -1,064

Net book value at 31 December 3,381 2,982

Net book value at 1 January 2,982 3,046


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10.2 Vehicles

2009 2008Vehicles Vehicles

CHF 000s CHF 000sCost or valuationBalance at 1 January 22,168 21,656Additions 4,932 3,789Disposals and write offs -5,090 -3,277Balance at 31 December 22,010 22,168

Accumulated depreciation and value adjustmentsBalance at 1 January -6,983 -5,749

Depreciation charge for the year -2,785 -2,620

Disposals 2,261 1,386Balance at 31 December -7,507 -6,983

Net book value at 31 December 14,503 15,185

Net book value at 1 January 15,185 15,907 See note 25 (b) for details of amounts included in the above which are subject to operating leases as lessor. 10.3 Other equipment

2009 2008Other

equipmentOther

equipment under assembly

Total Other

equipment

Total Other

equipmentCHF 000s CHF 000s CHF 000s CHF 000s

Cost or valuationBalance at 1 January 4,755 132 4,887 4,452Additions 245 - 245 638Transfers 132 -132 - -Disposals and write offs -112 - -112 -203Balance at 31 December 5,020 - 5,020 4,887

Accumulated depreciation and value adjustmentsBalance at 1 January -2,397 - -2,397 -1,712Depreciation charge for the year -925 - -925 -847Disposals 49 - 49 162Balance at 31 December -3,273 - -3,273 -2,397

Net book value at 31 December 1,747 - 1,747 2,490

Net book value at 1 January 2,358 132 2,490 2,740 Other equipment primarily includes computer equipment, generators, rubhalls and office equipment. Other equipment additions include CHF 106k of contributed assets (2008: CHF Nil).


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10.4 Intangible assets

Computer software

Computer software

under development

2009 Total

Computer software

2008 Total

Computer software

CHF 000s CHF 000s CHF 000s CHF 000sCost or valuationBalance at 1 January 3,394 2,609 6,003 3,920Additions 75 1,433 1,508 2,092Transfers 2,794 -2,794 - -Disposal and write offs -82 -68 -150 -9Balance at 31 December 6,181 1,180 7,361 6,003

Accumulated amortisation and value adjustmentsBalance at 1 January -2,167 - -2,167 -1,435

Amortisation charge for the year -1,416 - -1,416 -732Balance at 31 December -3,583 - -3,583 -2,167

Net book value at 31 December 2,598 1,180 3,778 3,836

Net book value at 1 January 1,227 2,609 3,836 2,485 11 Accounts payable

2009 2008CHF 000s CHF 000s

Suppliers 12,038 12,169National societies 4,135 9,042Payroll taxes payable 199 121Other 241 207

16,613 21,539 12 Provisions

2009 2008CHF 000s CHF 000s

Current provisionsOperations 17,668 12,901Project deficits 2,344 1,224Restructuring 1,273 832

21,285 14,957

Project 2009 2008Operations deficits Restructuring Total Total

CHF 000s CHF 000s CHF 000s CHF 000s CHF 000sCurrent provisionsBalance at 1 January 12,901 1,224 832 14,957 16,101Unused amounts reversed - -99 -157 -256 -Used during the year -12,901 -1,125 -38 -14,064 -15,078Additional provisions 17,668 2,344 636 20,648 13,934Balance at 31 December 17,668 2,344 1,273 21,285 14,957


Page 20

All provisions are current, and the IFRC expects to incur the resultant liabilities within the next year. The ultimate outflow of economic benefits arising from project deficits will be determined by the IFRC’s ability to cover the unfunded project expenditure through fund-raising activities. The restructuring provision includes estimated costs of the reorganisation of the management structure in Geneva. 13 Employee benefit liabilities

2009 2008CHF 000s CHF 000s

Staff vacation accrual 3,664 1,830Provision for post employment benefits 2,037 1,869Accruals for other short term benefits 488 294Total employee benefit liabilities 6,189 3,993 14 A ccrued expenses, deferred income and prepaid contributions

2009 2008CHF 000s CHF 000s

Accrued expenses 3,992 2,343Deferred income 44,041 78,842Prepaid statutory contributions 100 125

48,133 81,310 15 Funds held for field operations Earmarked balances

2009 2008CHF 000s CHF 000s

Field operations with temporary deficit financing -2,259 -2,215Donor-restricted contributions 285,168 379,469

282,909 377,254 Field operations are considered as having a deficit financing as soon as the contributions pledged and received do not cover the expenditure incurred and booked. In 2009, a total of CHF 1,747k was reimbursed to donors in respect of contributions received in previous years (2008: CHF 4,902k). 16 Designated reserves

Operational Specific Actuarial 2009risks projects valuations Total

2009 CHF 000s CHF 000s CHF 000s CHF 000s

Balance at 1 January 1,032 1,273 7,256 9,561Used during the year -136 -1,352 -2,720 -4,208Allocations during the year 164 919 - 1,083Balance at 31 December 1,060 840 4,536 6,436


Page 21

Operational Specific Actuarial 2008risks projects valuations Total

2008 CHF 000s CHF 000s CHF 000s CHF 000s

Balance at 1 January 944 589 4,039 5,572Used during the year -35 -193 - -228Allocations during the year 123 877 3,217 4,217Balance at 31 December 1,032 1,273 7,256 9,561 17 Voluntary contributions, net

Goods Services 2009 2008Cash in-kind in-kind Total Total

CHF 000s CHF 000s CHF 000s CHF 000s CHF 000s

National Societies 169,075 11,382 9,827 190,284 350,431Governments 46,415 - - 46,415 53,856International Organisations 29,207 - - 29,207 29,291Others 21,376 - - 21,376 25,991

266,073 11,382 9,827 287,282 459,569

18 Net finance income/(expense)

2009 2009 2009 2008Unrestricted Restricted Total Total

CHF 000s CHF 000s CHF 000s CHF 000s

Interest income on bank deposits 1,533 30 1,563 5,677Dividend income on global equity funds 452 - 452 586Net foreign exchange gain - 3,078 3,078 -Net change in fair value of financial assets at fair value through profit or loss 9,420 - 9,420 -Finance income 11,405 3,108 14,513 6,263

Net foreign exchange (loss) -294 - -294 -14,680Net change in fair value of financial assets at fair value through profit or loss - - - -11,491Finance expense -294 - -294 -26,171

Net finance income/(expense) 11,111 3,108 14,219 -19,908

Financial assets at fair value through profit or loss:Fair value gain on global bond funds/securities 5,567 - 5,567 1,811Fair value gain/(loss) on global equity funds/securities 3,853 - 3,853 -13,302Dividend income 452 - 452 586

9,872 - 9,872 -10,905

19 Other income

2009 2008CHF 000s CHF 000s

NoteSale of IFRC materials 20 51Rental income 25 (b) 2,556 2,302Project generated income 510 582Other income 1,397 1,211Sale of vehicle spare parts and other equipment & supplies 12,457 8,167Logistics services 528 645Surplus on sale of fixed assets, net 137 237

17,605 13,195


Page 22

20 Operating expenditure in-kind The following in-kind contributions are included within total operating expenditure.

2009 2009 2009 2008 2008 2008Goods Services Total Goods Services Total

CHF 000s CHF 000s CHF 000s CHF 000s CHF 000s CHF 000sEmployee benefit costs - 7,896 7,896 - 8,988 8,988Relief supplies 11,382 - 11,382 36,145 - 36,145Transportation and storage - 1,931 1,931 - 10,659 10,659

11,382 9,827 21,209 36,145 19,647 55,792 21 Employee benefit costs

2009 2008CHF 000s CHF 000s

Wages and salaries 126,693 117,659Contributed services 7,896 8,988Termination benefits 1,879 348Social security costs 3,026 3,115Pension costs - defined benefit plans 10,708 4,341

150,202 134,451 22 Pension costs – defined benefit plans The amounts recognised in the balance sheet are determined as follows:

2009 2008CHF 000s CHF 000s

Present value of funded obligations 160,462 146,236Fair value of plan assets -134,182 -108,492

26,280 37,744Unrecognised actuarial (losses) -30,816 -45,000Unrecognised asset due to limit in IAS19 paragraph 58b -Amount per balance sheet -4,536 -7,256 Change in defined benefit obligation during the year:

2009 2008CHF 000s CHF 000s

Defined benefit obligation 1 January 146,236 137,766Current service cost 7,023 6,753Interest cost 4,619 4,532Employee contributions 4,966 4,690Benefits paid -10,114 -10,348Administration expenses -489 -Liability loss due to experience 5,287 -Actuarial losses 2,934 2,843Defined benefit obligation 31 December 160,462 146,236


Page 23

Change in plan assets during the year:2009 2008

CHF 000s CHF 000s

Fair value of plan assets at 1 January 108,492 137,336Expected return on plan assets 4,425 6,944Actuarial losses on plan assets 18,914 -37,688Administration expenses -489 -Employer contributions 7,988 7,558Employee contributions 4,966 4,690Benefits paid -10,114 -10,348Fair value of plan assets at 31 December 134,182 108,492 The amounts recognised in the income statement are as follows:

2009 2008CHF 000s CHF 000s

Current service cost 7,023 6,753Interest cost 4,619 4,532Expected return on plan assets -4,425 -6,944Amortisation of net unrecognised gain 3,491 -Total included in staff costs 10,708 4,341

The actual return on plan assets was CHF 23,339k (2008 loss: CHF 30,744k).

Expected employer contributions for 2010 amount to CHF 8,148k. The principal actuarial assumptions used were as follows:

2009 2008

Discount rate 3.15% 3.25%Price inflation 1.5% 1.5%Expected return on plan assets 4.25% 4.0%Future salary increases 2.0% 2.0%Future pension increases 1.0% 1.0%

The expected return on plan assets is calculated as the weighted average by target allocation of estimated returns foreach category of asset.

The percentage of total plan assets invested in each major asset category at 31 December was:

2009 2008

Equity securities 41.9% 38.7%Debt securities 46.7% 57.7%Real estate 0.9% 0.7%Other 10.5% 2.9%Total 100.0% 100.0%

2009 2008CHF 000s CHF 000s

Experience loss on plan liabilities 5,287 -Experience (gain)/loss on plan assets -18,914 37,688


Page 24

23 Depreciation and amortisation

2009 2008CHF 000s CHF 000s

Depreciation of property, plant and equipment 3,776 3,531Amortisation of intangible assets - computer software 1,416 732

5,192 4,263 24 Provisions for operations and contributions to national societies In implementing its activities in the ordinary course of its business, the IFRC advances funds to member Red Cross and Red Crescent national societies. Two mechanisms are used to advance funds to member national societies for the implementation of activities – cash working advances and cash contributions. (a) Provisions for operations The IFRC provides cash working advances to national societies for them to implement activities on behalf of the IFRC. Amounts advanced are recognised as receivables until such time as recipient national societies report to the IFRC on their use of the funds. As indicated in note 2.12 (b), a provision is recognised for the value of working advances which has not been reported on by the recipient national societies, and the related expense is recorded in “Provisions for operations”. When recipient national societies report on their use of the funds, the provision is reversed, and the expense is reclassified according to its nature. (b) Contributions to national societies The IFRC makes cash contributions to fund the activities of member national societies. Such contributions are recognised as operational expenditure as they are incurred. 25 Leases a) Operating leases as lessee Cancellable operating leases The IFRC leases warehouses, office property and means of transport under cancellable operating leases. The leases may, typically, run for a period up to five years, with an option to renew the lease at the end of that period. Lease payments are increased annually to reflect market rentals. During the current year CHF 14,666k (2008: CHF 13,022k) were recognised as operating lease rental expense in the Consolidated Statement of Comprehensive Income, as follows:

2009 2008CHF 000s CHF 000s

Land, buildings and equipment 13,024 11,413Means of transport 1,642 1,609

14,666 13,022 The consolidated financial statements do not provide an analysis of future minimum lease payments under cancellable operating leases, as the IFRC considers that the costs, of providing reliable information for this analysis, outweigh the benefits, to the user, of such information.


Page 25

Non-cancellable operating lease The IFRC leases its Secretariat Headquarters in Geneva under a non-cancellable operating lease. Future minimum lease payments payable under this lease are as follows:

2009 2008CHF 000s CHF 000s

Amounts falling due within one year 227 227Amounts falling due in 2 to 5 years 908 908Amounts falling due after more than five years 7,495 7,722

8,630 8,857 b) Operating leases as lessor The IFRC leases vehicles to third parties under operating leases. The leases which run for periods up to five years are cancellable upon one month’s notice at any time during the lease period. Leases for periods of less than five years may be renewed, however, the maximum lease period is five years. In 2009, the following amounts have been recognised as income in the Consolidated Statement of Comprehensive Income:

2009 2008CHF 000s CHF 000s

Rental of vehicles to third parties 2,234 1,918Sub-leases of accommodation to staff 322 365Sub-lease of office premises to related parties - 19

2,556 2,302 Property, vehicles, other equipment and intangible assets – Vehicles (see note 10.2) includes the following amounts which are subject to leases as lessor:

2009 2008CHF 000s CHF 000s

Gross carrying amount 7,906 6,812Accumulated depreciation -2,650 -2,093Net book value 5,256 4,719

Depreciation charge for the year 917 834 26 Financial Instruments 26a Financial instruments by category The accounting policies for financial instruments have been applied to the line items below:

Assets at fair value through profit and loss Receivables Total

CHF 000s CHF 000s CHF 000s31 December 2009Assets as per balance sheet

Financial assets at fair value through profit or loss 20,497 - 20,497Cash and cash equivalents - 249,416 249,416Accounts receivable and prepayments - 143,266 143,266

20,497 392,682 413,179


Page 26

Assets at fair value through profit and loss Receivables Total

CHF 000s CHF 000s CHF 000s31 December 2008Assets as per balance sheet

Financial assets at fair value through profit or loss 87,981 - 87,981Cash and cash equivalents - 265,549 265,549Accounts receivable and prepayments - 172,536 172,536

87,981 438,085 526,066

26b Credit quality of financial assets The maximum exposure to credit risk for accounts receivable in respect of pledges and national societies receivables at the reporting date by type of donor was:

2009 2008CHF 000s CHF 000s

Accounts receivable, netNational Societies 82,622 80,830Governments 29,554 56,308International Organisations 16,742 19,737Others 4,423 6,950

133,341 163,825 The credit quality of cash at bank and short-term bank deposits can be assessed by reference to external credit ratings where available as follows:

2009 2008CHF 000s CHF 000s

Cash at bank and short-term bank depositsAAA 74 57AA+ 601 -AA 95 72AA- 1,709 32,167A+ 218,280 175,542A 20,000 52,606A- - 750BBB+ 111 -BBB 4,847 -BBB- - 197BB+ - -BB - 877BB- - 1B+ 11 -B 46 -B- 226 189CCC - 103C - 10D 1,007Unrated 1,569 1,951

248,576 264,522 The remainder of the “Cash at bank and short-term deposits” in the Consolidated Statement of Financial Position item is cash on hand.


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27 Taxes The IFRC is exempt from taxes in Switzerland and most countries in which its delegations are based. 28 Programme support recovery As a contribution to the costs of support for operations in the field, an additional 6.5% is added to the budget of each operation for service provision. This support includes services essential for an operation’s success such as human resources, finance, logistics, information technology and other support. The support for 2009 amounted to CHF 23,603k (2008: CHF 19,169k) and is added to unrestricted reserves. 29 Related parties a) Identity of related parties The IFRC has a controlling related party relationship with the Foundation for the International Federation of Red Cross and Red Crescent Societies (the Foundation). The Foundation is a special Foundation established as a separate entity whose principal activity is to support the objectives of the IFRC by providing the necessary institutional framework for international revenue projects undertaken by and to the benefit of the IFRC and its member Red Cross and Red Crescent national societies. As identified in Note 2.3 (b), the IFRC has interests in the following jointly controlled operations, whose activities are in accordance with the IFRC’s principal activities identified in Note 1 to these consolidated financial statements: Global Road Safety Partnership; Non-Governmental Organisations (NGOs) HIV/AIDS Code; ProVention Consortium; Sphere Programme and Steering Committee Human Response. The IFRC is the founder of the Masambo Fund which is a special Foundation established as a separate legal entity and is a party related to the IFRC. The principal activity of the Masambo Fund is to raise and provide funding, through national Red Cross and Red Crescent societies or other entities, for access to life saving drugs (including anti-retroviral therapy) to Red Cross and Red Crescent staff and volunteers to ensure the survival of humanitarian workers which is essential to maintain the national societies’ continuity and capacity to deliver humanitarian assistance. The IFRC has no beneficial interest in the net assets of the Fund, except upon liquidation of the Fund when the net assets of the Fund shall be transferred to the IFRC for use in support of HIV/AIDS programmes. The General Assembly is the supreme governing body of the IFRC. The Governing Board of the IFRC defines, within the framework of the general policy determined by the General Assembly, the policies for the various fields of activities of the IFRC. Individual members of the Governing Board together with close members of their families or households are parties related to the IFRC. The Finance Commission gives advice to the Governing Board on all financial matters affecting the IFRC. Individual members of the Finance Commission together with close members of their families or households are parties related to the IFRC. The Standing Commission of the Red Cross and Red Crescent comprises representatives of the IFRC, the International Committee of the Red Cross (ICRC) and National Red Cross and Red Crescent Societies. Its principal activities include organisation of the next International Conference and the next Council of Delegates. In between International Conferences, the Standing Commission works to encourage and further the implementation of resolutions of the International Conference. The Standing Commission is a party related to the IFRC. The International Conference of the Red Cross and Red Crescent is the supreme deliberative body of the International Red Cross and Red Crescent Movement. The Council of Delegates is the body where representatives of all components of the Movement meet to discuss matters which concern the Movement as a whole. Neither the International Conference nor the Council of Delegates are considered parties related to the IFRC. The IFRC has two retirement benefit plans which are independent funds that constitute separate legal entities and are governed by Swiss law. These plans are parties related to the IFRC. Key management personnel are persons having authority and responsibility for planning, directing and controlling the activities of the IFRC. This includes the Secretary General and other Senior Directors. Close members of their families or households are also parties related to the IFRC.


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b) Key management compensation The salaries and benefits of the Secretary General, Under-Secretaries General and Directors of the IFRC are set by the Governing Board. Their total benefits amounted to CHF 3,156k (2008: CHF 2,123k) made up as follows:

2009 2008CHF 000s CHF 000s

Short-term employee benefits 2,812 1,863Post-employment benefits 344 260

3,156 2,123 No other salaries or benefits (e.g. fringe benefits or loans) were granted to them. The IFRC has a Code of Conduct for all Staff, including members of the Governing Board, the Finance Commission, the Standing Commission of the Red Cross Red Crescent Movement as well as the Secretary General and other key management. Under the Code of Conduct, staff are required to disclose any potential conflict of interest to the Human Resources Department or the Risk Management and Audit Department of the IFRC Secretariat. c) Transactions with related parties During the year, the IFRC received CHF Nil (2008: CHF 2k) from the Foundation. At 31 December 2009, the IFRC had an outstanding receivable due from the Foundation, amounting to CHF 183k (2008: CHF 191k). During the year, the IFRC made voluntary contributions totalling CHF 35k (2008: CHF 67k) to its jointly controlled operations. At 31 December 2009 and 31 December 2008 there were no balances arising from transactions with jointly controlled operations. During the year, the IFRC received voluntary contributions on behalf of the Masambo Fund totalling CHF 55k (2008: CHF 75k). At 31 December 2009, the IFRC had an outstanding payable due to the Masambo Fund amounting to CHF 34k (2008: CHF 375k). During the year, the IFRC transferred CHF 230k (2008: CHF 230k) to the Standing Commission as a contribution towards the operational costs of the Standing Commission for the year. At 31 December 2009, the IFRC had an outstanding payable due to the Standing Commission amounting to CHF 17k (2008: CHF 35k). Other than compensation arising in the ordinary course of business as disclosed above, there were no transactions with key management personnel. No members of the Governing Board or the Finance Commission, or any other person related or connected by business to them, have received any remuneration or other compensation from the IFRC during the year. 30 Capital commitments Capital expenditure contracted for at the 31 December 2009 but not yet incurred, amounted to CHF 792k (2008: CHF 1,116k). 31 Contingencies The IFRC is periodically subject to various claims, legal actions and complaints arising in the ordinary course of operations. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. The IFRC believes the final outcome of these matters will not have a material adverse effect on its financial position or results of operations. The IFRC expenses legal costs as incurred.


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32 Regional and activity level reporting Operating segments reported to the Secretary General for the purposes of monitoring and allocating resources include income and expenditure by type of Appeal launched by the IFRC and income and expenditure by geographical zone in which the IFRC operates. These measures are obtained directly from the IFRC’s financial system. a) Reporting by type of appeal

2009 2008CHF 000s CHF 000s

Restricted incomeAnnual appeal 144,762 140,335Disaster response 125,788 268,977Tsunami operation 14,628 47,359Hosted projects 5,305 8,750Other projects 3,664 7,658Supplementary services 46,448 49,918

340,595 522,997

Elimination ERUs not under IFRC control - -15,472Reclassify project deficit write off -1,016 -1,114Reclassify unrealised foreign exchange differences -3,813 2,621Other reclassifications 483 -242

Total restricted income 336,249 508,790

2009 2008CHF 000s CHF 000s

Restricted expenditureAnnual appeal 141,666 140,889Disaster response 179,430 195,480Tsunami operation 48,944 82,218Hosted projects 8,427 11,647Other projects 9,841 1,537Supplementary services 47,648 47,209

435,956 478,979

Elimination ERUs not under IFRC control - -15,472Reclassify project deficit write off -1016 -1,114Reclassify unrealised foreign exchange differences -3,813 2,621Other reclassifications 483 -243Programme support recovery -23,603 -19,169Total restricted expenditure 408,007 445,602


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b) Reporting by geographical zone

2009 2008CHF 000s CHF 000s

Restricted incomeWestern Africa 28,645 23,256Southern Africa 30,003 41,406Eastern Africa 25,042 26,136Americas 23,127 31,237Asia Pacific 152,336 279,071Europe & Central Asia 17,581 18,417MENA 9,697 17,322Global Programmes 54,164 86,152

340,595 522,997

Elimination ERUs not under IFRC control - -15,472Reclassify project deficit write off -1,016 -1,114Reclassify unrealised foreign exchange differences -3,813 2,621Other reclassifications 483 -242Total restricted income 336,249 508,790

2009 2008CHF 000s CHF 000s

Restricted expenditureWestern Africa 29,181 27,393Southern Africa 34,854 37,458Eastern Africa 30,795 26,262Americas 29,490 24,770Asia Pacific 214,455 244,498Europe & Central Asia 18,310 18,663MENA 16,187 18,843Global Programmes 62,684 81,092

435,956 478,979

Elimination ERUs not under IFRC control - -15,472Reclassify project deficit write off -1,016 -1,114Reclassify unrealised foreign exchange differences -3,813 2,621Other reclassifications 483 -243Programme support recovery -23,603 -19,169Total restricted expenditure 408,007 445,602